Australian Coal Miners to Recapitalize, Consider BHP Assets, Other M&A, Energy News, ET EnergyWorld

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MELBOURNE: Driven by a rebound in the price of coal, Australian resource miners are dusting off their expansion plans and raising capital for new projects and acquisitions.

New Hope Corporation, a major producer of thermal coal, raised around A $ 200 million ($ 152 million) late last month, the use of which it says “could include further expansion of growth and opportunistic mergers and acquisitions activities “.

And Stanmore Resources said last week that its majority owner, Singapore-listed Golden Energy and Resources (GEAR), would increase its loan facility to $ 70 million, in part to help the Australian coal miner move its project forward. Isaac Plains.

New Hope and Golden Energy are seen by analysts and bankers as potential suitors for some of the BHP Group’s Australian coal assets, including the Mt. Arthur Thermal Coal Mine and its stake in a steel coal project with the Japanese Mitsui. Final offers are due for assets in the coming weeks, which BHP may sell separately or together.

BHP’s divestment process is expected to be a good barometer of demand for so-called polluting assets such as coal, amid growing pressure from financiers and environmental activists to switch to cleaner energy sources.

But with thermal coal prices hitting record highs and steel coal hitting two-year highs, the funding pressure on Australian miners for projects has eased somewhat.

The price rally will allow New Hope to pay off its $ 440 million debt and restore its balance sheet faster than expected to a net cash position, possibly as early as this year, analysts say. New Hope recorded a loss of A $ 111.6 million in 2020.

“We expect NHC to likely review the assets of BHP that the latter is seeking to vacate, including the nearby Mount Arthur thermal coal mine in the Hunter (Valley),” Citi said in a research note on last month.

New Hope’s organic growth options have been limited by fierce local opposition on environmental grounds to the expansion of its New Acland coal mine, which is awaiting a hearing in November.

Its strong operational skills, its low ash Bengalla coal that could improve the economy of Mt. Arthur thanks to the mix and a better financial situation would make him a good choice for the BHP asset, bankers and analysts told Reuters.

New Hope and BHP declined to comment.

New Hope said, however, that any new M&A opportunity must be on the lower end of the cost curve, create value from day one and have long-term approvals. Mount. Arthur’s operating license is set to expire in 2026, although BHP has requested its extension.

Analysts and bankers appreciate Mt. Arthur from a negative level of up to $ 400 million, due to his cost of $ 1 billion to restore the mine environment. RBC jointly values ​​the assets at $ 2.5 billion.

Another potential bidder for the asset is a coalition of activist investors Elliott and coal miner Peabody, a source familiar with the matter told Reuters.

Elliott did not respond to a request for comment from Reuters. Peabody declined to comment.

Golden Energy is a likely bidder for the iron and steel coal asset, a source familiar with the matter said, as it chooses to diversify from its thermal coal mines in Indonesia to metallurgical coal. Golden Energy did not respond to a request for comment.

The Australian newspaper previously reported that Indonesia’s BUMA was also in the running. BUMA did not respond to a request for comment. ($ 1 = AU $ 1.3177)


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